What is betting crypto? How to make extra money during the crypto winter
Important takeaways
- Crypto markets have seen a significant downward slide in recent months.
- Even during a crypto winter, investors have an opportunity to make extra money.
- Crypto-staking is an option for investors to earn passive income, but only for cryptocurrencies that use a proof-of-stake consensus mechanism.
The crypto winter is upon us. In other words, a major bear market has hit crypto investors hard. As long-term investors know, bear markets are a natural part of the business cycle. While the crypto winter may be especially hard to watch for crypto enthusiasts, there are still ways to make extra money through your crypto portfolio.
Let’s explore what crypto staking is. Plus, learn how you can use this strategy (and invest in crypto) to make extra money during the crypto winter.
What is crypto staking?
At the most basic level, staking crypto is a way to earn passive income from your crypto holdings. As an investor, you can think of betting crypto as similar to earning interest or dividends on a more traditional investment.
So how does staking work? Essentially, crypto owners can allow their cryptocurrency to be used to vouch for the accuracy of other transactions on an underlying blockchain network.
Blockchains contain a record of past transactions made with a cryptocurrency, and this record must be agreed upon. Otherwise, investors would not have confidence in the legitimacy of the currency. Staking is an approach some cryptos use to validate their blockchains, which involves users participating in approving and validating transactions on the blockchain.
Of course, the back end is relatively complicated. But as an investor, you don’t need to be involved in all the technical details. You have a couple of ways to do this:
- Bet on cryptocurrency through a crypto exchange: The exchange covers the technical aspects for you. In return for handling the back-end, the crypto exchange will take a cut of your profits.
- Join a betting pool: This requires you to transfer your funds to a specific crypto wallet before proceeding with staking. Like the crypto exchange, a pool administrator will handle the back end and take a portion of your profits.
When you earn from betting crypto, you will receive your rewards in a predetermined cryptocurrency. With that, staking is a way to grow your crypto portfolio. But the disadvantage of betting through a platform or pool is that part of the profit goes to the facilitator. Before moving forward with a particular option, shop around for a reasonable price.
Advantages of betting crypto
As with all investment choices, there are pros and cons to betting crypto. Let’s start by exploring the pros:
- Passive income: If you are a believer in the persistence of crypto, you can expand your crypto portfolio through a passive investment. You don’t need to monitor your crypto’s validations. Instead, the earnings from the stake will appear as crypto in your portfolio.
- High yield possible: Investors looking for relatively high returns can likely find them through crypto stakes. Although the exact amount you can earn varies based on several factors, you will likely earn more through your efforts than you would with a crypto savings account.
- Crypto exchange handles the process: Crypto staking relies on a complicated back-end system. But when you work through a crypto exchange, you essentially outsource any complications. You can just sit back and enjoy the returns.
Risks of Betting Crypto
Crypto is a particularly volatile investment. If you continue to stake your crypto, there are risks to be aware of. Here’s what you should know before jumping in:
- Volatility: Crypto is a volatile asset. Through crypto betting, you will earn rewards in the form of crypto. While you may have more cryptocurrency, the value of those assets can rise and fall significantly over time. With that, your real rewards may be lower than expected.
- Lack of liquidity: When betting crypto, you have to unlock the funds for a longer period of time. The time commitment can vary from a few days to a few months, and can in some cases be an unknown factor for the investor. During the betting period, most exchanges have a blocking period. Before you commit your money, make sure you’re comfortable with any lock-in timeframes. . If the price of your asset falls, you will not be able to withdraw your money for sale. In addition, betting on a relatively unknown coin can make it difficult to sell on major exchanges.
- Loss of crypto possible: Crypto is a resource that seems particularly vulnerable to theft, without many recourse options. With this risk in mind, it is best to work with the most reputable crypto betting platforms.
Which cryptocurrencies have betting options?
When you dive into the world of cryptocurrency, you will find that there are hundreds of coins out there. If you are interested in betting opportunities, you need to find cryptocurrencies that offer betting opportunities.
Some of the cryptocurrencies that offer staking include Algorand, Ethereum, Tezos, Cosmos, Solana and Cardano. The amount you can earn through staking varies based on the platform and cryptocurrency. For example, Coinbase offers staking opportunities for Ethereum with an APY offer of 4.00%. Coinbase’s top staking offer is 5.75% APY when staking Algorand.
Some of the cryptocurrencies that offer staking include Algorand, Ethereum, Tezos, Cosmos, Solana and Cardano. The amount you can earn through staking varies based on the platform and cryptocurrency. For example, Coinbase offers staking opportunities for Ethereum with an APY offer of 4.00%. Coinbase’s top staking offer is 5.75% APY when staking Algorand.
Is staking crypto right for you?
Betting crypto is a useful option for long-term crypto investors who are ready to look out for a potentially long crypto winter ahead. You can put your crypto to work for you. If you’re not worried about getting out of the market on short notice, the time commitments of crypto investing probably won’t be a deterrent.
As you consider your cryptocurrency betting options, look for the best APYs. But consider the stability of the crypto. While a smaller crypto may offer a higher APY, there is also a higher risk of crypto tanking. Also, make sure you’re comfortable locking up your money for an extended period of time before jumping in.
Crypto investing made easy
If you want to put your cryptocurrency to work, betting crypto is a worthwhile opportunity. But betting crypto comes with risks that not all investors are comfortable with. For investors who prefer a different strategy, Q.ai’s Crypto Kit may be the right move.
Q.ai uses artificial intelligence to monitor market changes. As market changes occur, Q.ai will automatically make the necessary adjustments to your portfolio to keep your holdings in line with your goals and risk tolerance.
Since crypto markets are so volatile, harnessing the power of artificial intelligence is particularly attractive. Even if you like to stay on top of changes in the crypto world, Q.ai can take some of the pressure off your portfolio management commitment.
Download Q.ai today for access to AI-powered investment strategies.
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